China’s market regulator has moved to rein in a brief but fierce wave of cash giveaways and promotional subsidies by major internet platforms, summoning seven leading firms for talks and publishing fresh antitrust guidance on the same day.
On February 13 the State Administration for Market Regulation (SAMR) convened executives from Alibaba, ByteDance’s Douyin, Baidu, Tencent, JD.com, Meituan and Taobao Flash Sale, warning them to stop “involution-style” promotional practices and to bring marketing and algorithmic operations into compliance. SAMR also issued the new Internet Platform Anti‑monopoly Compliance Guidelines, which set out four core categories of monopoly risks and eight typical scenarios to watch for in platform markets.
The summons came at the height of a seasonally amplified spending fight: platforms had announced or launched large Spring Festival “red envelope” campaigns and other subsidies to attract users. Tencent pledged RMB 1 billion in cash, Baidu RMB 500 million, Alibaba RMB 3 billion for a “Spring Festival host” plan, JD.com stated a RMB 3 billion distribution on New Year’s Eve, and other platforms rolled out vouchers, free orders and high‑value prizes. Taken together, the campaigns amounted to more than RMB 7.5 billion in pledged giveaways.
Regulators’ objections are not to festive marketing per se but to its effects and mechanics. SAMR’s guidance highlights risks including collusive algorithms across platforms, platforms facilitating monopolistic agreements among merchants, unfair high pricing, below‑cost selling, blocking or differential treatment of merchants, exclusive “choose‑one‑of‑two” demands, and platform‑driven price discrimination. Officials and industry observers flagged concerns that aggressive subsidies can become predatory when used to exclude rivals or coerce merchants into exclusivity.
The episode marks a clear effort to translate Beijing’s anti‑monopoly priorities into practical constraints on how large platforms compete for attention and market share—especially in the AI era. Many of the campaigns were explicitly tied to AI services or new traffic gateways, with firms using cash or near‑free offers to seed users into AI assistants, recommendation feeds and commerce funnels. SAMR’s guidance singles out algorithmic “rules” and urges platforms to pursue “fair rules, benevolent algorithms and compliant competition.”
For the platforms the immediate task is compliance. The concentrated talks function as a warning shot: regulators can require rapid adjustment of promotional mechanics, scrutinise whether subsidies constitute below‑cost dumping, and investigate if incentives induce exclusive dealing or differential treatment of merchants. The Guidelines also signal closer attention to algorithmic coordination that can arise from shared vendors, benchmarking, or imitation of ranking and personalization systems.
The broader implications reach beyond seasonal promotions. Tighter oversight of promotional subsidies and algorithms will affect marketing budgets, merchant economics and product roadmaps—particularly for companies using cash incentives to build AI user bases. Investors should expect muted short‑term promotional aggressiveness, while smaller merchants might benefit from reduced coercion but could face slower traffic growth. International observers will watch whether China’s approach to platform governance—combining soft summons with prescriptive algorithmic rules—becomes a template for other jurisdictions grappling with platform power.
For now the regulatory message is clear: volume spending to buy users will not be a free pass. Platforms that treat subsidies as a weapon rather than a measured growth strategy should expect more than a friendly conversation next time.